BITCOIN

User232002

And I do apologise for overdoing the Bitcoin thread, as you so eloquently put it. But here's a great post from 16th June 2022;

Frequentlyhere said:

I'm overdoing the bitcoin thread today, but I do find it interesting.

I think with the history you've refreshed us on, I'm starting to see why you feel the way you do.

In buying lots of BTC in April 2020, you feel vindicated by the idea of escaping the consequences of the FED's money printing with how much it has soared in value against the $. Your thesis seems to have been correct.

In my view though, your thesis is faulty. You did well, but not really for the reasons you bought it for. You're in a not much different position to the spec-tech investors going big on Peloton and Zoom and ARKK. You've ridden the wave of a hyper-accommodative monetary policy, which is now being reversed. 

Bitcoin currently at $70k and interest rates at 5%. What a time to be alive.

And that near bottom tick public purchase of Bitcoin at $18-$19k is looking like I somehow managed to get extremely lucky, twice? 

Frequentlyhere said:

Whilst I suppose it could still theoretically be correct, the difficult position your thesis has is that it's currently being systematically dismantled.

It's falling just like a tool of rampant speculation would.
Inflation is becoming worse, but Bitcoin is falling harder. 
A war started in Ukraine, and people fled to Gold, not Bitcoin.
It's not becoming less volatile, it's becoming more.

I think at this stage, everything has to go in reverse for your competing idea to be right. It's not enough for people not to trust the FED and go through a recession to suddenly love bitcoin. What's happening right now shows that. They also have to find a reason to believe in Bitcoin.

Narrator: Shortly after this post, everything did indeed go in reverse.

What was that about a thesis being systematically dismantled?

Scottex99

MeteredOut said:

The thing about anything that is driven by the greater fool theory is that it is those who have “made money” (mostly on paper) who make the noise, driving further FOMO, as evidenced by this thread when the price is rising as opposed to falling.

Honestly I think the greater fools here are people not having a small allocation to the fastest growing asset class of all time.

Of course some the $2.7tn is made up of nonsense junk and it's by no means a sure thing.

But it would personally drive me bananas if I didn't have a bit, even as a hedge.

If some new metal appears called SUPER CONDUCTOR ALLOYIUM and after 5-10 years it's being mentioned everywhere, had certain properties, and companies were trading it in the billions, I'd have a look even if I didn't agree it was the "best metal of all time".

It's much noisier elsewhere and there's actually some sensible discussion here in both the for and against camp. Anyone older than 25 years old claiming they are going "all in" on anything isn't likely to do well long term.

Paper profits is a relevant response as I've alluded to myself for previous cycles. Again people talking about how rich they are and the counter being "well not yet until it's in your bank" is time-wasting on both sides.

I actually took a bit of profit this weekend to prep myself for doing it later this year. What I can say is my current portfolio is approx 10-100x what friends my age (40) have in their traditional S&S accounts. Some have good salaries, some dont.

I believe in crypto in it's various forms and had conviction to buy more all the way down to $16k and back up again. Now it's time for a little pat on the back and suss out if there is anything scary around the corner whilst considering the exit plan.

Frequentlyhere

Honestly I think the greater fools here are people not having a small allocation to the fastest growing asset class of all time.
If some new metal appears called SUPER CONDUCTOR ALLOYIUM and after 5-10 years it's being mentioned everywhere, had certain properties, and companies were trading it in the billions, I'd have a look even if I didn't agree it was the "best metal of all time".

I totally get what you mean. If we put aside the points I've already mentioned for the moment, then the reason why I personally still wouldn't is largely because my investing aims are different to yours.

From the way you talk about buying/selling and being willing to lose it all, it seems pretty clear you're open to taking on a lot of risk with whatever money you have in bitcoin. 

In my case, I've followed down the FIRE path and built up wealth steadily via the usual tedious equity trackers, which of course themselves can be volatile. I'm definitely not willing to lose it all, and being able to lose 50% of my net wealth over a year or so is more than enough volatility for me. 

I could still buy a small allocation for bitcoin but for FIRE purposes the problem is that it's behaviour is far too unpredictable. I even have some gold, but I'm pretty damn sure that's not going to fall 90%, which bitcoin might. Or who knows, maybe some Quantam hack will end it all in one go? I'm not prepared to take that on. There's also still the risk of it all being nicked, which even the ETFs don't entirely avoid due to their caveats. 

You say 'certain properties' but it's been 14 years. Those properties are still far far less certain than gold, which is the closest thing I can compare it to (but obvs not the same).

I invest in gold itself holding my nose somewhat by the way as it's price outweighs it's actual utility by a great deal, but it does add just a twist of useful volatility to my portfolio. BTC, even shorn of it's environmental/crime/security issues is still a bridge too far for me.

Frequentlyhere

Funnily enough this tweet from a random financial journalist just rolled past for me. If here is more civil than Reddit, twitter makes Reddit look positively overabundantly polite.

TLDR; financial journalist says it's the Bitcoin evangelism that makes her worried - cue onslaught of intense and varied "you don't understand" type comments, direct personal insults etc, mostly from people who have based their entire twitter profile around Bitcoin. 

Again, not trying to say people here are like that. Still, I really hope that part of the scene dies out at some point.

Frequentlyhere

Sorry, I'm spamming myself a bit now, but also interesting to check in again with Yougov re: crypto, there's some mildly interesting data here.

I think you can see this data in whatever light you like really.

A cynic might note that still only 10-11% of British adults have invested in crypto incl. Bitcoin. On the other hand, that's doubled since Aug 2020 from 5%.

If you filter out the boomers and look at 25-49 year olds, then that number is as high as 18%, but strangely falls from 18 to 14% from August 2023 to January 2024, which is odd considering the price was rising steadily during that period. I have no idea whether there's anything to be read into that, or perhaps just an anomaly.

Of course this is just the UK anyway which doesn't make much of a dent in prices overall I imagine.

Cus

Scottex99 said:

MeteredOut said:

The thing about anything that is driven by the greater fool theory is that it is those who have “made money” (mostly on paper) who make the noise, driving further FOMO, as evidenced by this thread when the price is rising as opposed to falling.

Honestly I think the greater fools here are people not having a small allocation to the fastest growing asset class of all time.

Of course some the $2.7tn is made up of nonsense junk and it's by no means a sure thing.

But it would personally drive me bananas if I didn't have a bit, even as a hedge.

If some new metal appears called SUPER CONDUCTOR ALLOYIUM and after 5-10 years it's being mentioned everywhere, had certain properties, and companies were trading it in the billions, I'd have a look even if I didn't agree it was the "best metal of all time".

It's much noisier elsewhere and there's actually some sensible discussion here in both the for and against camp. Anyone older than 25 years old claiming they are going "all in" on anything isn't likely to do well long term.

Paper profits is a relevant response as I've alluded to myself for previous cycles. Again people talking about how rich they are and the counter being "well not yet until it's in your bank" is time-wasting on both sides.

I actually took a bit of profit this weekend to prep myself for doing it later this year. What I can say is my current portfolio is approx 10-100x what friends my age (40) have in their traditional S&S accounts. Some have good salaries, some dont.

I believe in crypto in it's various forms and had conviction to buy more all the way down to $16k and back up again. Now it's time for a little pat on the back and suss out if there is anything scary around the corner whilst considering the exit plan.

Were there any 40 year old mates of yours who put too much in too late, and then sold out at lows etc, and regret it? I hope not but they are out there..

Scottex99

Frequentlyhere said:

RichTips said:

"UK regulators to allow crypto-related securities"

"Bitcoin bulls are not the bigger fools"

Not my words. They're both from the FT, today.

That second one is an opinion piece, and honestly doesn't seem to have any more solid ground than "price goes up, so I guess it good".
It actually fairly systematically debunks any utility in bitcoin, but then finishes "There is an old Wall Street saying for moments like this: only the fools are dancing, but the bigger fools are watching"

Which is about as posh a version of 'FOMO' as I've seen.

To be honest though, if people like @scottex99 ,who seem to have their eyes open about the risks and spend little time talking about the supposed real world utility of the thing, then fair play to them.

The things I still mainly don't like about it are:

1) The real world bad things - funding crime, harm to environment.
2) The harm to less wise people who are sucked into  propagandising about price/utility.
3) The deception/outright lying that some do - "Bitcoin is good for the environment" " More fraud in the US dollar" I find very grating still.
4) Kind of linked to the above, this thing where the price goes up and suddenly ordinary PF boards are infiltrated with giddy excitement of fervent speculators, who then retreat like crabs into the rocks when the tide comes in.

Though in fairness I do think 3) and 4) are declining somewhat (unless this run goes on much longer perhaps!).

Quickly coming back on these:

1. I don’t have the stats to hand but something like less than 1% of all BTC txns have a link to crime, fraud etc. There are firms out there like Chainalysis and Elliptic who track exposure to dodgy exchanges and hacked protocols etc.

2. Will always happen, most retail investors are sheep and will buy the he top of every bubble regardless. 

3. You can use excess energy to mine BTC. I don’t know much on this but I kind of assume crypto doesn’t boil the oceans as it’s never mentioned anymore? Energy consumption by Tradfi is much higher.
There is more fraud in USD cash, of course. If you wanna buy guns, you probably wouldn’t use a method where every transaction is recorded forever, even if pseudo anonymous.

4 - Similar to 2. Because the price has increased so much since inception and is so volatile, it’s just inevitable. Maybe in future is bouncing between 500-800k and nobody bats an eyelid lol 

Scottex99

Cus said:

Scottex99 said:

MeteredOut said:

The thing about anything that is driven by the greater fool theory is that it is those who have “made money” (mostly on paper) who make the noise, driving further FOMO, as evidenced by this thread when the price is rising as opposed to falling.

Honestly I think the greater fools here are people not having a small allocation to the fastest growing asset class of all time.

Of course some the $2.7tn is made up of nonsense junk and it's by no means a sure thing.

But it would personally drive me bananas if I didn't have a bit, even as a hedge.

If some new metal appears called SUPER CONDUCTOR ALLOYIUM and after 5-10 years it's being mentioned everywhere, had certain properties, and companies were trading it in the billions, I'd have a look even if I didn't agree it was the "best metal of all time".

It's much noisier elsewhere and there's actually some sensible discussion here in both the for and against camp. Anyone older than 25 years old claiming they are going "all in" on anything isn't likely to do well long term.

Paper profits is a relevant response as I've alluded to myself for previous cycles. Again people talking about how rich they are and the counter being "well not yet until it's in your bank" is time-wasting on both sides.

I actually took a bit of profit this weekend to prep myself for doing it later this year. What I can say is my current portfolio is approx 10-100x what friends my age (40) have in their traditional S&S accounts. Some have good salaries, some dont.

I believe in crypto in it's various forms and had conviction to buy more all the way down to $16k and back up again. Now it's time for a little pat on the back and suss out if there is anything scary around the corner whilst considering the exit plan.

Were there any 40 year old mates of yours who put too much in too late, and then sold out at lows etc, and regret it? I hope not but they are out there..

I work in crypto so I see crazy stuff all the time, random geeky tech guys sitting on $20m etc.

For friends when I grew up and other people I hang out with, most are fairly clueless and not paying attention, or they classically pop up in manic bull runs and ask what coins are gonna 100x tomorrow. I spend most time explaining why buying at ATH might not be a great plan and to be careful with bankroll management etc.

The interesting thing about the cycles is most people from 2021 highs probably bought high, sold low and will never be back. Some held all this time and are back in the green.

Retail just do classic retail things all the time.

Veteransaver

Scottex99 said:

Frequentlyhere said:

RichTips said:

"UK regulators to allow crypto-related securities"

"Bitcoin bulls are not the bigger fools"

Not my words. They're both from the FT, today.

That second one is an opinion piece, and honestly doesn't seem to have any more solid ground than "price goes up, so I guess it good".
It actually fairly systematically debunks any utility in bitcoin, but then finishes "There is an old Wall Street saying for moments like this: only the fools are dancing, but the bigger fools are watching"

Which is about as posh a version of 'FOMO' as I've seen.

To be honest though, if people like @scottex99 ,who seem to have their eyes open about the risks and spend little time talking about the supposed real world utility of the thing, then fair play to them.

The things I still mainly don't like about it are:

1) The real world bad things - funding crime, harm to environment.
2) The harm to less wise people who are sucked into  propagandising about price/utility.
3) The deception/outright lying that some do - "Bitcoin is good for the environment" " More fraud in the US dollar" I find very grating still.
4) Kind of linked to the above, this thing where the price goes up and suddenly ordinary PF boards are infiltrated with giddy excitement of fervent speculators, who then retreat like crabs into the rocks when the tide comes in.

Though in fairness I do think 3) and 4) are declining somewhat (unless this run goes on much longer perhaps!).

Quickly coming back on these:

1. I don’t have the stats to hand but something like less than 1% of all BTC txns have a link to crime, fraud etc. There are firms out there like Chainalysis and Elliptic who track exposure to dodgy exchanges and hacked protocols etc.

2. Will always happen, most retail investors are sheep and will buy the he top of every bubble regardless. 

3. You can use excess energy to mine BTC. I don’t know much on this but I kind of assume crypto doesn’t boil the oceans as it’s never mentioned anymore? Energy consumption by Tradfi is much higher.
There is more fraud in USD cash, of course. If you wanna buy guns, you probably wouldn’t use a method where every transaction is recorded forever, even if pseudo anonymous.

4 - Similar to 2. Because the price has increased so much since inception and is so volatile, it’s just inevitable. Maybe in future is bouncing between 500-800k and nobody bats an eyelid lol 

What on earth is this excess energy you speak of? Apart from some locations close to hydro etc, any crypto mining is going to be using grid energy. Virtually nowhere has an excess of renewable energy yet. So even if Bitcoin can claim to be using renewable energy, it is displacing and mis-allocating renewable energy that could be used for other more socially useful things.

That gap is filled with non renewable energy, so this claim is completely disingenuous. 

"Energy use by traffic is much higher", that's a very bold claim do you have any evidence?and even if it was you are comparing the entire financial network that makes the world go round with a tiny amount of Crypto currency. Hardly a like for like comparison. 

User232002

Veteransaver said:

Apart from some locations close to hydro etc, any crypto mining is going to be using grid energy. 

Literally one page ago posted an article about 'Gridless,' that, predictably given the name, is not using Grid energy.

Veteransaver said:

Virtually nowhere has an excess of renewable energy yet. 

Actually, the exact opposite is true. Renewable energy grids almost always have an excess of energy, which is why the prices for it are so cheap.

This shouldn't be surprising, yet it somehow always is to climate activists. Solar energy is not particularly useful when most energy use occurs in the evening. Hydro power is not particularly useful when most of the energy is generated in a single quarter of the year. There is a reason that Bitcoin miners moved to Sichuan in China during the rainy season prior to 2021. Its why demand response programmes even exist.

Veteransaver said:

So even if Bitcoin can claim to be using renewable energy, it is displacing and mis-allocating renewable energy that could be used for other more socially useful things.

Here is a chart of Bitcoin priced in Egyptian Pounds.



How about we ask an Egyptian whether Bitcoin is 'socially useful'? How about we ask an Egyptian whether the energy expended to maintain the Bitcoin network is 'mis-allocated.' 

Veteransaver said:

That gap is filled with non renewable energy, so this claim is completely disingenuous. 

The only disingenuous claim is you, from your position of relative privilege, telling someone that energy is mis-allocated because you deem it so or because you are relatively inoculated from the effects of it not being expended. 

Fully expect that within the next decade, a Bitcoin mining company simply resolves to build its own energy generation facility. You should be cheering on a private company deciding to invest capital to build something that is normally the preserve of nation states alone.